Capital Gains Tax Changes

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Construction Industry Scheme

What is the scheme?

The scheme sets out rules for how payments to subcontractors for construction work must be handled by contractors in the industry, taking into account the subcontractor’s tax status

The scheme covers all construction work carried out in the UK, including tasks such as site preparation, alterations,dismantling, building, repairs, decorating and demolition.

It does not usually cover tradespeople who only do specific jobs,such as architects, surveyors, carpet fitters, manufacturers of construction materials, and those who deliver such materials.

However, an exception exists where a professional goes beyond their discipline to act as the developer or main contractor on top of providing their services.While it does not apply to construction work taking place outside the UK, a business based outside the UK and carrying out construction work within it must register under the scheme.

The scheme covers all types of businesses within the construction industry, including companies, partnerships and sole traders. These businesses can be contractors,subcontractors or both.

The terms ‘contractor’ and ‘subcontractor’ have specific meanings under the construction industry scheme, which are much broader than is generally referred to within the industry

How it works

All contractors and subcontractors should register with HMRC for the construction industry scheme. Subcontractors will be subject to a higher-rate deduction if they have not registered.Contractors deduct money from a subcontractor’s payments and pass it to HMRC.

These deductions count as advance payments towards income tax and national insurance, similar to PAYE. A limited company will have deductions taken by the contractor from the income due to the company.This deduction can then be offset against other company tax liabilities such as PAYE, VAT, corporation tax or can be refunded to the company after the end of the tax year.Sole traders and partnerships will also have deductions made from the income they receive.

They are then required to report their gross income on their self-assessment tax returns, with contractor deductions also reported on the tax return and subsequently deducted from any income tax liability which is calculated as being due.

Contractors need to verify a subcontractor’s status with HMRC before payment is made to establish whether they are registered and the correct amount of tax to withhold. Tax can be deducted at source at 0%, 20% or 30%.

Contractors must report all of the payments they have made under the scheme to the Revenue, or report they have made no payments in the tax month, by the 19th of each month.Penalties apply if the monthly return deadline is missed.

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CIS Subcontractor Package

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This includes everything you need to stay compliant with CIS and HMRC whist ensuring you receive the maximum refund your are entitled to.

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CIS Reverse VAT Charge Guide

Upcoming changes for reverse VAT charge in the Construction Industry Scheme

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CIS VAT Reverse Charge

Examples

Subcontractors

How to prepare for the reverse charge.

HMRC has advised those affected by the change to take the following steps by 1 October 2019:

Check whether the reverse charge affects your sales and purchases.
Update your accounting systems and software to deal with the reverse charge.
Consider whether the change will impact your cashflow.
Ensure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will operate.

The other preparations you’ll need to make will depend on whether you’re a contractor, a subcontractor, or a business receiving specified services.

If you’re a subcontractor, you can prepare by contacting your customers to confirm whether the reverse charge will apply. You should also find out whether they are an end user or intermediary supplier.

End user or intermediary supplier

Example

“Company A is building a new warehouse. They hire to Company B to provide the design andbuilding work for the warehouse. Company B subcontract the building of thewarehouse out to Company C for materials and Company D for the construction whoin turn subcontract out equipment hire to Company D and hire subcontractorworkers for the build………Who charges for the VAT?”

Subcontractors

How to prepare for the reverse charge.

Contractors should review all their contracts with subcontractors, decide if the reverse charge will apply, and notify their suppliers if it will.

HMRC has advised those affected by the change to take the following steps by 1 October 2019:

Check whether the reverse charge affects your sales and purchases.
Update your accounting systems and software to deal with the reverse charge.
Consider whether the change will impact your cashflow.
Ensure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will operate.

The other preparations you’ll need to make will depend on whether you’re a contractor, a subcontractor, or a business receiving specified services.

Example

Subcontractors

How to prepare for the reverse charge.

If your business receives building or construction services that are reported under the CIS but does not supply them, it will be considered an ‘end user’ under the scheme. This means the reverse charge will not apply, and your supplier will need to charge VAT in the normal way.You should provide confirmation of your end-user status to your supplier, to make them aware that the reverse charge does not apply.

HMRC has advised those affected by the change to take the following steps by 1 October 2019:

Check whether the reverse charge affects your sales and purchases.
Update your accounting systems and software to deal with the reverse charge.
Consider whether the change will impact your cashflow.
Ensure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will operate.

The other preparations you’ll need to make will depend on whether you’re a contractor, a subcontractor, or a business receiving specified services.

Example

CIS VAT Reverse Charge

How to prepare for the reverse charge.

HMRC has advised those affected by the change to take the following steps by 1 October 2019:

Check whether the reverse charge affects your sales and purchases.
Update your accounting systems and software to deal with the reverse charge.
Consider whether the change will impact your cashflow.
Ensure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will operate.

The other preparations you’ll need to make will depend on whether you’re a contractor, a subcontractor, or a business receiving specified services.

Accounting Packages

MTD Accounting Packages

Company Package

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180

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Company Compliance and Support Service that includes everything you need as a director to keep compliant whilst ensuring you and your business are as tax efficient as possible.

Tax Return Package

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This package includes everything you need to keep compliant with HMRC whilst ensuring your affairs are as tax efficient as possible.

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This includes everything you need to keep compliant with HMRC whilst ensuring you and your business are as tax efficient as possible.

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Making Tax Digital for VAT

What do i need to comply?

Subcontractors

Contractors

Contractors should review all their contracts with subcontractors, decide if the reverse charge will apply, and notify their suppliers if it will.

Businesses

Which businesses are affected?

MTD for VAT is compulsory for VAT-registered businesses with turnover above the current VAT-registration threshold of £85,000, which has been frozen until 1 April 2020.

From the start of their first VAT return period or after 1 April 2019, VAT-registered businesses with turnover above the VAT registration threshold will need to comply with the digital record-keeping and reporting requirements of MTD for VAT.

VAT-registered businesses whose turnover is below the VAT registration threshold will be able to choose whether to join MTD for VAT.

Once within the scheme, a business must remain in it while they are VAT-registered,even if their turnover falls below the VAT-registration threshold.

We can help you make your Let Property Campaign disclosure easy and hassle free whilst ensuring you only pay the right amount of tax. We give a full tax review on all of the years you did not declare, helping identify allowable expenses or reliefs that could help minimise your tax liability.

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Exemptions

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There are very few exemptions for MTD for VAT. If any of the following exemptions apply to your business, HMRC advise you to contact the VAT Helpline on 0300 200 3700.

Religious societies

The business is run entirely by practicing members of a religious society whose beliefs are incompatible with the requirements of MTD for VAT. This could be where their beliefs prevent them from using computers

Company Package

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180

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Company Compliance and Support Service that includes everything you need as a director to keep compliant whilst ensuring you and your business are as tax efficient as possible.

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Not practical

An exemption may apply where it’s not reasonably practical to use digital tools to keep business records or to submit returns for reasons of age, disability, remoteness of location or for any other reason.

Insolvency

If an insolvency procedure is in place, an exemption from MTD for VAT may be granted

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Designory Data

It’s compulsory for you to keep a digital record of your business’ name and an address, which is the principal place of business. Your business’ VAT-registration number and a record of any accounting schemes used must also be recorded digitally.

Supplies Recieved

For each supply your business receives, you need to record the time of supply, the value of supply (including any VAT that cannot be reclaimed), and the amount of input tax to be claimed.If there is more than one supply on an invoice, the totals from the invoice can be recorded.

Supplies Made

For each supply made by your business, you must record the time it was supplied, how much it was worth at the time and the rate of VAT charged. Multiple supplies made at the same time don’t need to be recorded separately. The total value of supplies on each invoice or receipt that have the same time of supply and rate of VAT can be recorded. A record must also be kept of output values for the period split betweens tandard rate, reduced rate, zero rate, exempt and outside the scope outputs.

HOW IS THE BILL CALCULATED?

The VAT account provides the link between the digital VAT records and the VAT return submitted to the Revenue.

Under MTD for VAT, the information which must be held in the VAT account must be maintained digitally and this is referred to as the ‘electronic account’.

To demonstrate a link between the output tax in the business records and the output tax on the VAT return, the electronic account must contain a record of:

output tax owed on sales
output tax owed on acquisitions from other EU member states
any tax to be paid on a supplier’s behalf under a reversecharge procedure
any tax owed following a correction or error adjustment
any other adjustment required by the VAT rules

Similarly, to demonstrate the link between the input tax in the businessr ecords and the input tax on the VAT return, the electronic account must contain a record of:

input tax which can be claimed on business purchases
input tax allowable on acquisitions from other EU member states
tax that can be reclaimed following a correction or error adjustment
any other necessary adjustment.

Where adjustments are required, only the total value for each type of adjustment will need to be kept digitally.

However, while the underlying calculations don’t have to be made digitally or using software, and can be performed manually or by using spreadsheets if preferred, using software should reduce the risk of errors. The electronic account is vital as the information held in it will be used to calculate and complete the VAT return using functional compatible software

What is ‘functional compatible software’?

‘Functional compatible software’ is the cornerstone of MTD for VAT. It will be used to maintain the compulsory digital records, calculate the return and submit it to HMRC via an application programme interface (API). Functional compatible software is simply the name given to a software program, or set of compatible software programs, which are capable of:

recording and preserving records in an electronic form
providing information and returns from the records to HMRC inan electronic form using the API platform
receiving information from HMRC

It’s possible to mix and match software – the complete set of digital records needed for MTD for VAT don’t need to be held in one piece of software.

As long as there is a link between the different pieces of software, the records can be held in a range of acceptable digital formats.

The link between the software is key, and is a legal requirement where a set of compatible software programs is used.

HMRC is likely to produce a list of software from commercial software suppliers which can be used for MTD for VAT.

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All of our fees are quoted for and agreed in advance. This makes it easy for you to budget and protect your cashflow with our monthly payment terms.

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We offer Free business review meetings to our clients all year. We can help you to analyse your business and make achievable targets to improve.

Completing and submitting VAT returns

The VAT return is calculated from the digital records maintained in the functional compatible software, and a business will need to confirm the return is correct before sending it to HMRC.

Once submitted, confirmation the return has been received by HMRC will be received via the software, while VAT returns can be submitted by us on behalf of your business.

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If you have properties to declare then get in touch and we will talk it over with you so we can provide you with a fixed fee, no obligation quote.

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You can call us on 0208 858 4303, send an email to info@finsburyrobinson.co.uk or click the link below to fill out our online form.

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Our UK qualified accountants have over 20 years experience with tax and dealing with HMRC.

EXPERIENCED IN LET PROPERTY

We have been handling clients let property campaign since the campaign started in 2013.

EASY, HASSLE FREE

We can handle the entire process, taking the stress away by dealing with HMRC for you.

Fixed Competitive Fees

Our pricing is simple, fixed and agreed in advance, allowing you to plan for all your costs.

FREE FULL TAX REVIEW

We will conduct a full tax review to make sure you are claiming everything your entitled to.

NATIONAL UK COVERAGE

We can work with you online/over the phone from anywhere in the UK.

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All About

Making Tax Digital

Which businesses are affected?

MTD for VAT is compulsory for VAT-registered businesses with turnover above the current VAT-registration threshold of £85,000, which has been frozen until 1 April 2020.

From the start of their first VAT return period or after 1 April 2019, VAT-registered businesses with turnover above the VAT registration threshold will need to comply with the digital record-keeping and reporting requirements of MTD for VAT.

VAT-registered businesses whose turnover is below the VAT registration threshold will be able to choose whether to join MTD for VAT. Once within the scheme, a business must remain in it while they are VAT-registered, even if their turnover falls below the VAT-registration threshold.

Where turnover is above the VAT-registration threshold on 1 April 2019, the start date will depend on how the VAT quarters fall:

VAT Return Quarters	MTD Start Date
Ending 31 March, 30 June, 30 September, 31 December	1 April 2019
Ending 30 April, 31 July, 31 October, 31 January	1 May 2019
Ending 31 May, 31 August, 30 November, 28 February	1 June 2019

What Exemptions are there?

There are very few exemptions for MTD for VAT. You maybe granted exemption if your business is a Religious Society, it is undergoing insolvency procedures or that you find it is not reasonably practical to use digital tools to keep business records based on reasons for age, disability or remoteness of location.

If any of these exemptions apply to your business or that you are unsure, HMRC advise you to contact the VAT Helpline on 0300 200 3700.

What Records do I need to keep digitally?

Certain records must be kept digitally within functional compatible software under MTD, and be preserved for up to six years.

Designory Data

Supplies Recieved

Supplies Made

For each supply made by your business, you must record the time it was supplied, how much it was worth at the time and the rate of VAT charged. Multiple supplies made at the same time don’t need to be recorded separately.

The total value of supplies on each invoice or receipt that have the same time of supply and rate of VAT can be recorded. A record must also be kept of output values for the period split between standard rate, reduced rate, zero rate, exempt and outside the scope outputs.

What is ‘functional compatible software’?

There are a range of different ‘Functional compatible software’ available including Online Book-keeping Software, Excel Bridge Software, Online VAT Submission Software and Accountant specific Software.

They must be capable of recording and preserving records in an electronic form, providing information and returns from the records to HMRC in an electronic form using the API platform and receiving information from HMRC
‍
It’s possible to mix and match software – the complete set of digital records needed for MTD for VAT don’t need to be held in one piece of software.

As long as there is a link between the different pieces of software, the records can be held in a range of acceptable digital formats.

what is the vat account?

output tax owed on sales
output tax owed on acquisitions from other EU member states
any tax to be paid on a supplier’s behalf under a reversecharge procedure
any tax owed following a correction or error adjustment
any other adjustment required by the VAT rules

Similarly, to demonstrate the link between the input tax in the business records and the input tax on the VAT return, the electronic account must contain a record of:

input tax which can be claimed on business purchases
input tax allowable on acquisitions from other EU member states
tax that can be reclaimed following a correction or error adjustment
any other necessary adjustment.

Completing and submitting VAT returns

Getting ready

The countdown has begun and VAT-registered businesses need to start getting ready. It’s important to understand what’s required and what records must beheld digitally. It’s also important to decide what software will suit the business, and whether a single piece of software or a set of software will be best for you.

Once you have decided, you should make checks to ensure everything is up and running by the relevant start date. HMRC has promised a soft landing – but, as always, it pays to be prepared.

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Capital Gains Tax: 30 Day Payment Window

Capital Gains Tax: 30 Day Payment Window

Who is affected?

Why are the rules changing?

What else is changing for capital gains tax?

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Services

Construction Industry Scheme

How it works

Looking for an Accountant who can Help?

Examples

Subcontractors

How to prepare for the reverse charge.

Subcontractors

How to prepare for the reverse charge.

Subcontractors

How to prepare for the reverse charge.

How to prepare for the reverse charge.

How to prepare for the reverse charge.

MTD Accounting Packages

What do i need to comply?

Subcontractors

Contractors

Businesses

Which businesses are affected?

Exemptions

Reasons to choose us

Designory Data

Supplies Recieved

Supplies Made

pricing

Contact Us

Reasons to choose us

Our Solutions

MTD Basic

MTD Premium

Compare Packages

Our Solutions

MTD Basic

MTD Premium

What Records do I need to keep digitally?

Designory Data

Supplies Recieved

Supplies Made